Loyal customers are dying....

Last week I happen to walk by past an old book store. I had some nostalgic memories of travelling all the way to town to visit this store to purchase cassettes and books (yup, it was that old memory). It was during my college days. During the interim, a lot of things changed... I started my globetrotting and the modern retailing format and mega malls percolated into the Indian market place.

Re-establishing my base back in the city after about 5 years, I had been moulded into the browse and kill-time-with-coffee culture. I had always been a book lover and preferred having music playing in the background and going about my reading than plonking myself in front of the TV. I loved browsing in the new book store format, pick up a couple of books, settle myself in the in-house cafe and while away couple of hours with a single coffee. Hence, I always avoided this book store in the recent past.

But last week, as I walked past, my colleague insisted we enter just for the heck of it. I did pick up a couple of CDs. At the checkout, my friend wanted to reserve a CD while he did some background check on the score. The person manning the counter (who apparently happens to be one of the owners) was very rude and hardly ever smiled. It sounded very odd in this "customer friendly" era.

I remembered reading a press article highlighting how such "nostalgic" outlets catered to die-hard book lovers (or music lovers) and preferred them as customers. Thus, me and my colleague were not fitting the discriptiion of a "customer" to this book store. I feel sorry for this attitude. These "nostalgic" outlets seem to be living in a cocoon of their own make. They dont realise that their die-hard customers are getting old and dying. The new customers, myself and those of my ilk, have different preferences and attitudes for purchase. We want customized service for mass products. We want to be left alone while browsing. We want to scan the books before purchasing (and dont mind spending even around 30% of the book cost on coffee that cost a few rupees while we do it).

These "nostalgic" outlets are an endangered species. And will soon die out along with their die-hard customers. They need to soon adapt themselves to the new generation. True, they may lose their existing customers ... but this base is anyways shrinking.

Yesterday while travelling in train towards office, I was intrigued by a person in his mid-40s who was constantly making phone calls. From his discussion, I could gather that he was following up with different person within the same customer company on his payments. It turned out that he was the account manager for an agency providing security services. This customer had not paid him for over 7 months for the services of security guards which were still being provided. The dues totaled over 1.6 million rupees.

Since the guy looked very stressed, I did not initiate any communication with him. But I wonder why did this agency still provide services to an apparently bad customer. This customer was not paying them for over 7 months and still the services were being provided. The dues had climbed to 1.6 million rupees and still mounting. The agency should have stopped providing services to this customer long back.

It is true that a customer - vendor relationship is a partnership. But this should be a symbiotic partnership where both parties benefit. Partnership where one party suffers is an Antibiosis. Or in common parlance - parasitic. And nature always tries to get rid of parasites. So also, this security agency should have terminated its services long back instead of waiting for the receivables to mount to such high figure. And bad as it is, the agency was still providing services in good faith.

The world of finance has beautiful advice on this:
"One should take ones profit slowly and cut ones losses faster".

Too eager to serve... frightens the customer

My colleague has put up his experience with customer service at his bank. Check out Customer Oriented Banking. This reminds of a very funny albeit frustrating episode with my banker. Refer to the post on the Power of Gold since this happens to be linked with the same bank.

As mentioned, this bank had accorded to me a gold status which meant among other things that I get priority treatment at the branch. The bank's branches have a token machine at the entrance. A customer has to select the type of transaction and type of customer. So whenever I went to the local branch to say drop a cheque, I selected the "Cheque Deposit" transaction and "Gold Customer". The moment I got my token, the security guard at the entrance used to holler "Gold, Gold" within the branch. This used to happen at every visit.

It was getting very frustrating. Every time I took a token, the guard shouted his "Gold, Gold" chant and all persons in the waiting area turned around to look at the guard and me. I asked the guard why he is shouting so. He said he has been instructed by the branch manager. I asked the branch manager why this was so. He said that gold customers are accorded priority treatment and his tellers need to know a gold customer has walked in so they can quickly service his needs. I still failed to understand why the guard was shouting. The branch manager stated that I should not worry since the guard shouting is not troubling me.

I explained to him that the guard shouting is exactly what worries me. Everytime the guard shouts, the people in the branch turn around and take a good look at me. I told him that I did not want to be conspicious and would prefer to be within the crowd and quietly move to the head of the queue and move out without having come to the notice of all the people in the branch. But for some reason the branch manager failed to appreciate this concern and continued with the practice of the guard shouting "Gold, Gold".

Slowly, I started dreading going into the branch. I preferred travelling another kilo meter to the branch of another bank where I had an account and doing my money transactions from this bank. Over time I moved all my new transactions to this new bank. The old instruments at the earlier bank matured and was transferred to the new bank. Today, I only have an auto loan at the first bank.

And all along the bank has neither realized nor discussed with me as to why my transactions have dropped with the bank.

I still continue to drive one additional kilo meter for my banking needs.

If only the bank understood that I enjoy being a gold customer but hate having everyone know that I am a gold customer.

The stress continues !!!

My last post was on my experience with renewal of my health insurance policy. I thought the saga ended there. But apparently I have a sequel to it now.

After the episode in the first installment, I got a mail from the company giving details of the renewal and a renewal policy contract. I noticed that my address, name and insured person name was mis-spelt. I replied to the email with this information and listed the correct data.

The next day I received a call from "apparently a different" department stating that my policy is renewed and couriered. I share the information of error to this person. He takes my information and raises a service request for the same. He said the corrected policy card will be sent to me.

When I get my policy document via courier next day, I notice the error in name still exists. I get in touch with the call center on this and end up being rewarded with one more service request number.

In the next two days, I get one policy document package and three courier letter with my policy card in each. The last one had my name and address mentioned correctly.

The entire renewal process had costed the company two courier packets and three couriered letters with the policy card. I wonder what was the cost of renewal of the policy for this company. OR was it my mail to the Director Retail business which made my case a high priority item to be resolved at all costs. I just wonder.

Stressing health insurance renewal!!!

I have a Family Floater health insurance policy active for 4 years now. This policy is up for renewal in August 2009. This is a plan for 2 Adults & 1 Kid for sum of Rs. x amount. On receipt of the renewal form, I contacted the call center to inform of a new addition in my family, a lovely daughter and my wish to add her to the Family Floater plan. I was told that this cannot be done online and that I need to get in touch with the branch to get the amendment done.

I contacted the company’s representative at the local branch from where I had bought the policy. I informed him of the amendment I need to make and the subsequent premium that I need to pay. He came back with a premium amount for a sum assured of Rs. x+y amount. I told him that I wish to keep the sum assured the same, ie Rs. x. He stated that since there is an addition of a member to the plan, the sum assured has to be increased. He stated that the company does not provide a Rs. x amount coverage to 2 Adults & 2 Kids plan. I had earlier checked up the premium on the website. There is clear process to renew or purchase a Family Floater plan for 2 Adults & 2 Kids for a sum assured of Rs. x amount. When I informed the representative of this, he changed his stance stating that he is mandated to not sell a Rs. x amount coverage for Family of 4 persons.

Now, I seem at a crossroad. The call center stated I need to contact branch for the amendment. The branch representative states he needs to increase the sum assured to Rs. x+y amount. The online web site permits me to purchase a policy for sum assured of Rs. x amount.

At this moment, I pulled up the annual report of the insurance company. Something told me I will get no help from the corporate office. I found the name of the Director for Retail business and shot off a mail to him on this background. I was hoping the email id typed was right and the mail does not bounce off. When I got a reply from the director stating he will look into the matter, I knew the email id was a right guess.

That day evening, the branch representative called me and stated that he has "special approval from his ASM" for my case and he can give me the renewal with the amendment and no increase in the sum assured. The next day I get a call from the sales team from the corporate office. The person says he has to close the issue since the mail has been sent to him. He takes all my details and renews my policy.

So finally I get my health insurance policy renewed (and hopefully without too much stress to spoil my health).

And in all this melee, If only some words of congrats or best wishes been uttered on the news of my new daughter.

Customer loyalty <> Loyalty cards

Time and again whenever I ask marketing personnel on their customer loyalty programmes, I get the same answer -- "Yes, we have loyalty cards". Somehow, there is this accepted practice that a loyalty programme is all about loyalty cards. There is an understanding that the more points a customer has, the more loyal he is.

Unfortunately, this is not true. Every marketer today has sponsored a loyalty card. Every credit card gives spender points. Every airlines gives mileage point. Every debit card gives cash back. So when everyone gives the same offer, there is no differentiation in your position in the customer mind.

About 15 years back I was considering getting my first credit card. The card provider I selected was the only one giving spender points. And that was the reason I selected this credit card. Today, I carry 4 credit card, and the last credit card I opted for was because it provided me access to the lounge of the airlines I use frequently. The fact that it provides spender points never entered my domain of evaluation.

Now comes the question... so if spender points is not important, can it be taken off. There is a cost to maintain the spender points accumulation and redemption. Companies can save this cost and effort. So back to the same question... can it be taken off?

My answer is "YES, it can be taken off".

The biggest challenge is to move away from the common practice of spender points. This is one ritual that often marketers dread to break away from. And more important, there is no justification statement for continuing with this ritual.

Let us consider the previous case. Do I track the number of points garnered on my credit card? No. My only expectation is to get a private location where I can work undisturbed while waiting at the airport.

So can the loyalty points be taken off? Yes, it can. But it needs to be replaced by something more relevant. To a credit card, it could be access to some facilities -- airport lounge in my case. To an airline, it could be option of booking a preferred seat. To a bank, it could be automatic addition of an appliance to the household insurance.

This will get the customer prefer your service over the competitor because he is getting some additional service that will make life easier for him.